Interim Financial Statements
ALLIANCE MINING CORP.
INTERIM FINANCIAL STATEMENTS
June 30, 2013
(Unaudited - Prepared by Management)
Aliance Mining Corp.
Consolidated Statement of Financial Position
For the Six Months Period Ended June 30, 2013
Note June 30 December 31 2013 2012
ASSETS
Current
| Cash | $ 29,922 | $ 2,870 | |
| GST recoverable | 9,096 | 35,004 | |
| Share subscription receivable | 7(b) | 34,233 | 4,160 |
| Loan receivable | 13,000 | - | |
| Prepaid rent | 23,000 | - | |
| Due from related parties | 9(a) | - | 14,413 |
109,251 56,447
Non-current
| Prepaid expenses | 24,038 | 23,082 |
| Mineral properties | 95,945 | - |
| Equipment | 5 23,156 | 31,519 |
| Total assets | $ 252,390 | $ 111,048 |
LIABILITES AND SHAREHOLDERS' EQUITY
Current
| Accounts payable and accrued liabilities | $ 187,510 | $ 141,005 |
| Due to related parties | 2,734 | 13,918 |
| Total liabilities | 190,243 | 154,923 |
Shareholders' equity
| Share capital | 7 | 3,189,701 | 2,744,001 |
| Share-based payment reserve | 156,596 | 156,596 | |
| Accumulated other comprehensive income | 2(d)(ii) | 19,450 | 36,608 |
| Deficit | (3,303,600) | (2,981,080) |
62,147 (43,875) Total liabilities and equity $ 252,390 $ 111,048
Nature and continuance of operations (Note 1)
Commitments (Note 10)
Subsequent event
See accompanying notes to the unaudited condensed interim financial statements
Approved and authorized by the Board on August 31, 2013:
"Chris Anderson" Director "Patrick Forseille" Director Chris Anderson Patrick Forseille
Alliance Mining Corp.
Condensed Interim Statement of Comprehensive Loss and Deficit
Three month Three month Six month Six month period period period period Notes ended June 30 ended June 30 ended June 30 ended June 30 2013 2012 2013 2012
Expenses
| Accounting, Audit and Legal | 20,287 | 14,650 | 36,008 | 16,047 |
| Automotive and Travel | 5,674 | 1,900 | 12,670 | 4,142 |
| Bank Charges and Interest | 186 | 227 | 672 | 803 |
| Consulting | 9(b) 42,970 | 55,949 | 123,990 | 107,094 |
| Depreciation | 5,453 | 1,217 | 9,308 | 2,123 |
| Exploration | 6 3,799 | 33,854 | 15,799 | 56,594 |
| General and Administration | 44,461 | 24,923 | 78,705 | 34,526 |
| Management Fees | 9(b) - | - | 7,500 | 39,000 |
| Marketing | 17,366 | 14,500 | 17,366 | 14,886 |
| Regulatory and Filing Fees | 5,573 | 10,075 | 27,087 | 36,841 |
| Rent | 9(b) 8,427 | 8,141 | 22,161 | 14,906 |
| 154,196 | 165,436 | 351,267 | 326,962 | |
| Loss before other items | (154,196) | (165,436) | (351,267) | (326,962) |
| Foreign exchange (Loss) gain | 10,579 | 8,758 | 10,579 | (6,067) |
| Accounts Payable Written Off | 1,630 | - | 1,630 | - |
| Net loss for the period | (141,987) | (156,678) | (339,058) | (333,029) |
Other comprehensive income
Foreign currency transaction difference for foreign operations - (8,224) 8,059 4,739 (141,987) (164,902) (330,999) (328,290)
Loss and comprehensive loss for the period
Basic and diluted loss per common share (0.01) (0.01) (0.01) (0.01)
Weighted average number of common shares outstanding 33,410,306 23,870,391 32,103,124 25,760,047
See accompanying notes to the unaudited condensed interim financial statements
Aliance Mining Corp.
Consolidated Statements of Changes in Equity (Unaudit-Prepared by Management)
AS AT JUNE 30
Share-Based Payment Reserves Number of Notes common Share capital Finders' Stock options Accumulated Deficit Total shares warrants other shareholders comprehensive ' equity income- translation reserve
| Balance at December 31, 2011 | 25,468,124 $ | 2,419,001 $ | 4,892 $ | 178,216 $ | 20,460 $ | (2,166,802) $ | 455,767 | |
| Shares issued for private placement | 7(b) | 2,620,000 | 141,000 | - | - | - | - | 141,000 |
| Shares issued on warrants exercised | 7(c) | 375,000 | 30,000 | - | - | - | - | 30,000 |
Other comprehensive income Foreign currency translation
| Difference for foreign operations | - | - | - | - 4,737 | (4,737) | - | ||||
| Comprehensive loss for the period | - | - | - | - | (328,290) | (328,290) | ||||
| Balance at June 30, 2012 | 28,463,124 $ | 2,590,001 $ | 4,892 $ | 178,216 $ | 25,197 $ | (2,499,829) $ 298,477 | ||||
| Shares issued for private placement | 7(b) 1,540,000 | 154,000 | - | - | - | - | 154,000 | |||
| Shares issued on warrants exercised | - | - | - | - | - | |||||
| Share-Based Payments | - | - | - | 32,278 | - | 32,278 |
Fair value of expired warrants and stock options - - (4,892) (53,898) - 58,790 - Other comprehensive income Foreign currency translation
| Difference for foreign operations | - | - | - | - | 11,411 | (11,411) | - | ||
| Comprehensive loss for the period | - | - | - | - | - | (528,630) | (528,630) | ||
| Balance at December 31, 2012 | 30,003,124 $ | 2,744,001 $ | - $ | 156,596 $ | 36,608 $ | (2,981,080) $ | (43,875) | ||
| Shares issued for private placement | 4,700,000 | 445,700 | - | - | - - | 445,700 |
Other comprehensive income Foreign currency translation
| Difference for foreign operations | - | - | - | - | (17,158) | 16,538 | (620) |
| Comprehensive loss for the period | - | - | - | - | - | (339,058) | (339,058) |
| Balance at June 30, 2013 | 34,703,124 $ | 3,189,701 $ | - $ | 156,596 $ | 19,450 $ | (3,303,600) $ | 62,147 |
The accompanying notes are an integral part of these unaudited interim consolidated financial statement
Alliance Mining Corp.
Condensed Interim Statement of Cash Flows (Unaudited - Prepared by Management)
Three month Three month Six month Six month period period period period ended June 30 ended June 30 ended June 30 ended June 30 2013 2012 2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period (141,987) (164,902) (339,058) (328,290)
Items not affecting cash
| Amortization | 5,453 | 1,217 | 9,308 | 2,123 |
| Share-based compensation | - | - | - | - |
| Unrealized foreign exchange loss | 2,000 | - | 5,599 | - |
| Accounts Payable Written Off | 1,630 | - | 1,630 | - |
| (132,904) | (163,685) | (322,521) | (326,167) |
Changes in non-cash working capital items
| Amounts receivable | (23,000) | 9,177 | (36,000) | 9,177 |
| Share subscription receivable | (34,233) | - | (30,073) | - |
| GST recoverable | 40,860 | 16,546 | 25,908 | 2,577 |
| Prepaid expenses | 6,880 | - | (956) | - |
| Accounts payable & other liabilities | 54,083 | (21,515) | 46,505 | (74,578) |
| (88,314) | (159,477) | (317,137) | (388,991) |
INVESTING ACTIVITIES
| Reclamation deposit | - | (76) | - | (4) | ||
| Proceeds on mineral properties | (50,568) | - | (95,945) | - | ||
| Purchase of equipment | 4,590 | (26,689) | 8,363 | (26,580) | ||
| (45,978) | (26,765) | (87,582) | (26,584) |
CASH FLOWS FROM FINANCING ACTIVITIES
Shares issued for cash gross, net of share
| subscription receivable | - | 121,000 | 445,700 | 171,000 | ||
| Share subscription advances | - | (52,500) | - | 97,500 | ||
| Shares issued upon foreign exchange operations | (16,022) | - | (17,158) | - | ||
| Repayment to related parties | 20,289 | - | 3,229 | - | ||
| Advances from (to) shareholders | - | - | - | (16,712) | ||
| 4,267 | 68,500 | 431,771 | 251,788 | |||
| Change in cash for the period | (130,025) | (117,742) | 27,052 | (163,787) | ||
| Cash position, begining of period | 160,017 | 327,444 | 2,870 | 373,489 | ||
| Cash, end of period | 29,992 | 209,702 | 29,922 | 209,702 |
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
NOTE 1 – NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN
Alliance Mining Corp. (the “Company”) was incorporated on February 3, 2002 under the laws of the Canada Business Corporation Act and is involved in the acquisition, exploration, and development of mineral properties. The Company holds mineral claims located in Arizona, USA.
The head office, principal address, and records office of the Company are located at 888 Dunsmuir Street, Suite 888 Vancouver, British Columbia, Canada, V6C 3K4.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards on the basis that the Company is a going concern and will be able to meet its obligations and continue its operations for its next fiscal year. Several conditions as set out below cast uncertainties on the Company’s ability to continue as a going concern.
The Company’s ability to continue as a going concern is dependent upon the financial support from its shareholders and other related parties, its ability to obtain financing for the continuing exploration and development of its mineral properties, the existence of economically recoverable reserves, and the attainment of profitable operations or proceeds from disposition of these properties.
The Company has not yet achieved profitable operations and has accumulated losses of $3,303,600 as at June 30, 2013. There is no assurance that the Company will be successful with generating and maintaining profitable operations or will be able to secure future debt or equity financing for its working capital and exploration and development activities.
These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
a) Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These unaudited consolidated financial statements were approved and authorized for issue by the Board of Directors on August 31, 2013.
b) Basis of Preparation
These consolidated financial statements have been prepared on a historical cost basis except for financial instruments classified as available-for-sale that have been measured at fair value. Cost is the fair value of the consideration given in exchange for net assets.
c) Basis of Consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned U.S. subsidiary, Alliance Mining Inc. (collectively, the “Company”). Intercompany balances and transactions are eliminated in preparing the consolidated financial statements. The following companies have been consolidated within these consolidated financial statements:
Entity Country of Incorporation Holding Functional Currency
Alliance Mining Corp. Canada Parent Company Canadian Dollar Alliance Mining Inc. U.S.A. 100% US Dollar
d) Foreign Currency
These consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the parent company. The subsidiary determines its own functional currency (Note 2(c)) and items included in the financial statements of the subsidiary are measured using that functional currency.
i) Transactions and Balances in Foreign Currencies
Foreign currency transactions are translated into the functional currency of the respective entity, using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year-end exchange rates are recognized in profit or loss.
Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction and are not retranslated. Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.
ii) Foreign Operations
On consolidation, the assets and liabilities of foreign operations are translated into Canadian dollars at the exchange rate prevailing at the reporting date and their revenues and expenses are translated at exchange rates prevailing at the dates of the transactions.
Foreign currency differences are recognized in other comprehensive income and accumulated in the currency translation reserve in equity.
On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in earnings and recognized as part of the gain or loss on disposal.
e) Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognized to write off the cost of the property and equipment less their residual values over their useful lives using the declining balance method using the following rates, except in the year of acquisition, when one half of the rates are used:
Automobile 30% Computer Equipment 30% Furniture and Equipment 20% Machinery and Camp Equipment 30%
The estimated useful lives, residual values, and depreciation method are reviewed at the end of each reporting period with the effect of any changes in estimate accounted for on a prospective basis.
An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
f) Exploration Costs
Expenditures related to the acquisition, exploration, and development of mineral properties are expensed and charged to earnings in the period in which they are incurred.
g) Impairment of Non-Current Assets
The carrying amounts of non-current assets are reviewed for impairment whenever facts and circumstances suggest that the carrying amounts may not be recoverable. If there are indications of impairment, then the recoverable amount of the asset is estimated in order to determine the extent of any impairment. Individual assets are grouped together as a cash generating unit for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are independent from other group assets.
The recoverable amount of an asset or cash generating unit is the higher of its fair value less costs to sell and its value in use. An impairment loss exists if the asset’s or cash generating unit’s carrying amount exceeds the recoverable amount and is recorded as an expense immediately. In assessing the value in use, the estimated future cash flows are adjusted for the risks specific to the cash generating unit and are discounted to their present value with a discount rate that reflects the current market indicators.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as income immediately.
h) Provisions
(i) Decommissioning and Restoration Provision
Future obligations to retire an asset, including dismantling, remediation, and ongoing treatment and monitoring of the site related to normal operations are initially recognized and recorded as a provision based on estimated future cash flows discounted at a credit-adjusted risk-free rate. This decommissioning and restoration provision is adjusted at each reporting period for changes to factors including the expected amount of cash flows required to discharge the liability, the timing of such cash flows, and the discount rate. The provision is accreted to full value over time through periodic charges to profit. This unwinding of the discount is charged to financing expense in the statement of comprehensive income.
The amount of the decommissioning and restoration provision initially recognized is capitalized as part of the related asset’s carrying value and depreciated to profit. The method of depreciation follows that of the underlying asset. The costs related to a decommissioning and restoration provision is only capitalized to the extent that the amount meets the definition of an asset and can bring about future economic benefit.
As at December 31, 2012 and 2011, the Company has no material decommissioning and restoration provision.
(ii) Other Provisions
Provisions are recognized when a present legal or constructive obligation exists as a result of past events and it is probable that an outflow of resources that can be reliably estimated will be required to settle the obligation. Where the effect is material, the provision is discounted using an appropriate current marketbased pre-tax discount rate.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
i) Share Capital
Share capital includes cash consideration received for share issuances, net of commissions and issue costs.
Shares issued for other than cash consideration are valued at the quoted price on the TSX Venture Exchange based on the earliest of: (i) the date the shares are issued, and (ii) the date the agreement to issue the shares is reached.
j) Share-Based Payments
The fair value method of accounting is used for share-based payment transactions. Under this method, the cost of stock options and other share-based payments is recorded based on the estimated fair value using the Black- Scholes option pricing model at the grant date and charged to profit over the vesting period. The amount recognized as an expense is adjusted to reflect the number of equity instruments expected to vest.
Upon the exercise of stock options and other share-based payments, consideration received on the exercise of these equity instruments is recorded as share capital and the related share-based payment reserve is transferred to share capital.
k) Income Taxes
Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity.
i) Current Income Tax
Current income tax assets and/or liabilities comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the consolidated financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
ii) Deferred Income Tax
Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full.
Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.
l) Loss per Share
Basic loss per share is calculated by dividing net loss by the weighted average number of common shares issued and outstanding during the reporting period. Diluted loss per share is the same as basic loss per share, as the issuance of shares on the exercise of stock options and share purchase warrants is anti-dilutive.
m) Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities classified at fair value through profit or loss) are added to, or deducted from, the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities classified at fair value through profit or loss are recognized immediately in profit or loss.
Financial assets and financial liabilities are measured subsequently as described below. The Company does not have any derivative financial instruments.
i) Financial Assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:
- Financial assets at fair value through profit or loss;
- Loans and receivables;
- Held-to-maturity investments; and
- Available-for-sale financial assets.
The category determines subsequent measurement and whether any resulting income and expense is recognized in profit or loss or in other comprehensive income.
All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below.
- Financial assets at fair value through profit or loss – Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or that meet certain conditions and are designated at fair value through profit or loss upon initial recognition. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments. Assets in this category are measured at fair value with gains or losses recognized in profit or loss. The Company’s cash falls into this category of financial instruments.
m) Financial Instruments (Continued)
i) Financial Assets (Continued)
- Loans and receivables – Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortized cost using the effective interest method, less any provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Company’s share subscription receivable and amounts due from related parties fall into this category of financial instruments.
Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is based on recent historical counterparty default rates for each identified group. The impairment losses are recognized in profit or loss.
- Held-to-maturity investments – Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity, other than loans and receivables. Investments are classified as held-to-maturity if the Company has the intention and ability to hold them until maturity. The Company currently does not hold financial assets in this category.
Held-to-maturity investments are measured subsequently at amortized cost using the effective interest method. If there is objective evidence that the investment is impaired as determined by reference to external credit ratings, then the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in profit or loss.
- Available-for-sale financial assets – Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Company currently does not hold financial assets in this category.
Available-for-sale financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognized in profit or loss. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognized in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income.
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
In respect of available-for-sale financial assets, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income and accumulated in the investment revaluation reserve.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.
m) Financial Instruments (Continued)
ii) Financial Liabilities
For the purpose of subsequent measurement, financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities upon initial recognition.
- Financial liabilities at fair value through profit or loss – Financial liabilities at fair value through profit or loss include financial liabilities that are either classified as held for trading or that meet certain conditions and are designated at fair value through profit or loss upon initial recognition. Liabilities in this category are measured at fair value with gains or losses recognized in profit or loss. The Company currently does not hold financial liabilities in this category.
- Other financial liabilities – Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the effective interest rate method amortization process. The Company’s accounts payable and other liabilities and amounts due to related parties fall into this category of financial instruments.
A financial liability is derecognized when it is extinguished, discharged, cancelled, or expired.
n) Comparative Figures
Certain comparative figures have been reclassified to conform to the financial statement presentation adopted for the current year. These reclassifications have no effect on the consolidated net comprehensive loss for the year ended December 31, 2011.
NOTE 3 – SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
In the application of the Company’s accounting policies which are described in Note 2, management is required to make judgments, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
Significant judgments, estimates, and assumptions that have the most significant effect on the amounts recognized in the consolidated financial statements are described below.